UPDATE 1-Brazil must do more to meet key fiscal target -IMF

BRASILIA May 12 (Reuters) - Brazil must do more to achieve
its 2015 fiscal savings goal and needs deep economic reforms to
foster stronger growth, the International Monetary Fund said on
Tuesday.

In its annual assessment, the IMF cited government missteps
that have dragged the once-booming Brazilian economy toward an
expected recession this year, but it endorsed the more orthodox
policies of new Finance Minister Joaquim Levy.

An IMF official said it is crucial for Brazil to meet its
2015 primary surplus goal to regain investors' confidence. The
primary surplus, or excess revenues before interest payments on
debt, is a key gauge of capacity to repay debt.

"Given the weak underlying fiscal position in 2014, the
fiscal target of 1.2 percent of GDP for 2015 is appropriate, but
further measures will be needed to meet this target," said the
report, which was completed on March 4 when the bulk of the
savings measures had already been announced.

IMF official told reporters later the size of the upcoming
budget freeze will help clarify whether the government needs to
tighten the belt further to reach the goal this year.

Faced with crumbling business confidence shortly after
re-election in October, President Dilma Rousseff picked fiscal
hawk Levy to rebalance public accounts after years of unchecked
spending.

Levy has led an unpopular austerity push that has raised
taxes on cosmetics and imports, and has severely cut spending on
government programs.

Levy has warned the administration is ready to hike taxes
again, raising complaints from business and union leaders as
well as some politicians who believe austerity will deepen the
recession.
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